All businesses in the southern city may soon be required to have fire insurance, a senior official has said.

Selected as a pilot city early this year for a fire insurance program by the Ministry of Public Security and China Insurance Regulatory Commission (CIRC), Shenzhen along with Shanghai and Tianjin will lead the way in the effort to improve insurance coverage.

"We will ensure the launch of compulsory fire liability insurance through legislation and will try to implement it within the year," said Vice-Mayor Chen Yingchun at a recent meeting.

Once the legislation is passed, all businesses in the city including notorious fire traps like hotels, restaurants, disco bars and rented apartments, may have to have insurance.

According to the CIRC Shenzhen Bureau, who will oversee the program, the new compulsory insurance will better protect the public and cut the losses of business operators when fire occurs.

Meanwhile, the local government, who usually have to compensate the injured and dead when business operators are not able to pay, will no longer be burdened.

"It's quite significant to carry out the program in Shenzhen since it has become one of China's most densely populated cities. Any fire can cause big damage to property or people," a CIRC official in Shenzhen told China Daily.

Official figures indicate that there are more than 10,000 restaurants, 2,000 hotels and bars and 2.9 million rented apartments in Shenzhen.

In 2005 there were nearly 3,000 fires, killing 29 people and injuring 38. The fires caused 5 million yuan (US$625,000) worth of damage.

Most of the accidents took place in small businesses like restaurants, shops, workshops, Internet cafes and nightclubs. Most operators did not have the sense to buy fire insurance, according to the local fire bureau.

However, CIRC Shenzhen Bureau advised that the program is still at an early stage. The whole framework, including premiums and specific clauses, is expected to be worked out later this year.

Predictably, local insurance companies welcomed the news.

"We are happy about the new compulsory insurance since it will be helpful to individuals and companies, and we insurers will also benefit," said a manager surnamed Li with the Shenzhen office of PICC Property and Casualty Company.

The company currently offers liability insurance to compensate for death or injury, "but it is not very popular," he admitted.

Businesses were divided in their opinions about the program.

"Our head office has bought insurance for us, so we will surely support the government's new policy," a public relations official of Shenzhen Park'N Shop told China Daily yesterday.

But Chen Bin, who runs a small restaurant serving Sichuan cuisine, said the move would only raise operating costs. "We will be careful. Buying insurance means wasting money," he said.

(China Daily August 3, 2006)